Just Approved: Program for move-up buyers helps clients purchase Marin home

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11:43 am PDT, Monday, August 6, 2018

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Just Approved: Program for move-up buyers helps clients purchase Marin home

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Mortgage adviser: John Holmgren.

Property type: Single-family home in San Rafael.

Purchase price: $1.440 million.

Loan terms: 5/1 ARM.

Rate: 4.5 percent with no points.

Loan amount: $1.152 million.

Backstory: I assisted these buyers when they bought their first home in Oakland. They wanted to move to Marin and to buy before they sold their Oakland home. They had some equity in their home and some savings, but they did not have enough liquid funds to put down 20 percent on a new home and to qualify to carry both sets of housing expenses.

I identified a loan program that would make a new home purchase possible. Normally in this situation, home buyers must say that they intend to rent their current residence so that the rental income will offset some or all of their housing expenses. They must have at least 25 percent equity in their current home.

To make this situation work, I referred them to a bank to set up a home equity line of credit that went up to 90 percent of their home value. With the loan program used for the new home purchase, imputed rental income (as determined by a rent survey) was used to offset their housing cost. This did not require any minimum level of equity in their current home.

The clients used their savings plus the home equity line proceeds to put 20 percent down on the new home. When they sell their current home, they will apply any remaining equity to reduce the new home loan balance or they will put the funds back into liquid investments. The home purchase was closed in 30 days.